As part of its operations, Genesis Capital had entered into a partnership with cryptocurrency exchange Gemini to create the Gemini Earn program. This program allowed investors to lend their Genesis assets via a tripartite agreement, guaranteeing them a profit at a predetermined time frame. Genesis Capital utilized the capital from these loans to fund large-scale projects.
Under the agreement with Gemini, approximately 60 million shares of GBTC were pledged as collateral for participants in the Gemini Earn program. However, Genesis Capital failed to honor its commitment by refusing to pay interest to investors. Consequently, Gemini claimed the GBTC shares as collateral that Genesis should use to repay its obligations.
In October of 2023, Gemini took legal action against Genesis, aiming to secure the GBTC shares to satisfy the claims of affected Gemini Earn investors. Gemini asked the court to prevent Genesis from controlling the GBTC shares and using them to repay any creditors involved in the bankruptcy proceedings. On the other hand, Genesis requested court approval to sell trust assets worth $1.6 billion.
While the court was not entirely swayed by Gemini’s arguments, the news of the imminent sale of GBTC shares has the potential to impact the Bitcoin exchange rate. Nevertheless, Bitcoin’s value continues to rise steadily. Genesis Capital recently admitted to offering investors unregistered securities through the Gemini Earn program and reached a settlement of $21 million with US authorities to resolve related legal issues.